Steady in­crease in money sup­ply

China Daily European Weekly - - Business -

Cen­tral bank gover­nor says reg­u­la­tors need to pre­vent fi­nan­cial risks more proac­tively, ef­fec­tively

year ear­lier, ac­cord­ing to data from the Peo­ple’s Bank of China, the cen­tral bank, on Dec 11.

Banks’ new lend­ing in yuan surged to 1.12 tril­lion yuan ($169 bil­lion; 144 bil­lion eu­ros; £127 bil­lion) in Novem­ber, al­most dou­ble Oc­to­ber’s 663.2 bil­lion yuan, and it was much above the mar­ket’s ex­pec­ta­tion of about 800 bil­lion yuan, com­pared with 1.27 tril­lion yuan in Septem­ber, ac­cord­ing to the of­fi­cial data.

By the end of last month, the to­tal out­stand­ing yuan loans had in­creased by 13.3 per­cent from a year ear­lier. And the new loans in the first 11 months reached a to­tal of 12.94 tril­lion yuan — 290 bil­lion yuan higher than the full-year record of 2016.

China’s cen­tral bank Gover­nor Zhou Xiaochuan said at an in­ter­nal meet­ing on Dec 11 that fi­nan­cial reg­u­la­tors need to pre­vent fi­nan­cial risks more proac­tively and ef­fec­tively, to bal­ance eco­nomic growth.

“The next step is to iden­tify the key tar­gets of fi­nan­cial re­form, openingup and in­no­va­tive devel­op­ment,” said Zhou.

The top fi­nan­cial reg­u­la­tors have cooled money sup­ply growth and is­sued new reg­u­la­tions clamp­ing down on high-risk lend­ing, es­pe­cially “shadow bank­ing” busi­ness, to pre­vent sys­temic fi­nan­cial risks.

Louis Kuijs, head of Asia eco­nom­ics at Ox­ford Eco­nom­ics, says: “In 2018, we ex­pect pol­i­cy­mak­ers to re­main fo­cused on re­duc­ing fi­nan­cial risks and delever­ag­ing parts of the fi­nan­cial sys­tem deemed par­tic­u­larly risky, fore­see­ing reg­u­la­tory tight­en­ing with re­spect to in­ter­bank mar­ket ac­tiv­ity and shadow bank­ing.”

He also ex­pects pol­i­cy­mak­ers to aim for a grad­ual slow­down of credit growth next year. “Af­ter prob­a­bly slightly ex­ceed­ing the 13.8 per­cent tar­get for 2017, we project credit growth to ease fur­ther, to around 13 per­cent in 2018.”

On Dec 11, the cen­tral bank also is­sued data on China’s to­tal so­cial fi­nanc­ing, a broad mea­sure of credit and liq­uid­ity in the econ­omy in­clud­ing off-bal­ance fi­nanc­ing, which in­creased to 1.6 tril­lion yuan in Novem­ber from 1.04 tril­lion yuan a month ear­lier.

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